• US December PPI 1.0% vs 1.3% expected
• ECB’s Lane: Interest rate cuts are not a near-term topic
• Baker Hughes oil rigs -2 in the current week to 499
• The state of the US consumer and the economic risks, according to JP Morgan
• US says it expects some sort of retaliation from the Houthis
• Canadian retail spending ticked lower in December – RBC
• Reminder: Monday is a holiday in the US

Markets:

• Gold up $19 to $2047
• US 10-yaer yields down 3.4 bps to 3.94%
• US 2-year yields down 11 bps to 4.15%
• WTI crude oil up 77-cents to $72.72
• S&P 500 up 4 points to 4783
• JPY leads, EUR lags

The big question everyone is asking for the second day is: Why such a strong bid in two-years? Yields are down 25 bps since the post-CPI peak on Thursday with a near-relentless bid. There was some ammunition with a softer PPI number today and others are pointing to Yemen and the upcoming PCE report factors but that’s a stretch.

Curiously, other markets didn’t really buy into what was happening in bonds, sparking talk (unfounded so far as I can tell) that some kind of fund blowup might be behind the moves. The US dollar initially fell with yields, boosting the euro to 1.0986 — a session high — but it slowly backed off to 1.0949 last.

Most dollar trades followed a similar path of strength early in the day with a reversal as Europe closed up shop. Importantly, the US is closed on Monday so that could have created some lumpy flows.

As for Yemen, oil rallied to $75.25 early only to slide all the way back to $72.79 on steady selling in New York. That’s typical of geopolitical events that don’t truly touch on oil supply (though I acknowledge the risks). The US continues to say that it doesn’t want a war.

Have a wonderful weekend.

This article was written by Adam Button at www.forexlive.com.

The major US stock indices are ending the day with mixed results. The Dow was lower on the day and although both the S&P and Nasdaq closed higher, it was only by modest changes. Nevertheless, the Nasdaq is now up 6 consecutive days after starting the New Year on the back foot by moving sharply lower. The last two days, however, have only risen by about 0.02%

The final numbers are showing:

• Dow Industrial Average is down -118.06 points or -0.31% at 37592.99
• S&P is closing up 3.61 points or 0.08% at 4783.84
• Nasdaq is closing up 2.56 points or 0.02% at 14972.75.

For the trading week, the major indices are ending with gains after declines last week that snapped 9-week gains for the S&P and the Nasdaq indices:

• Dow Industrial Average rose 0.34%. Last week the index fell -0.59%.
• S&P index rose 1.84%. Last week the index fell -1.52%.
• NASDAQ index rose 3.09%. Last week the index tumbled -3.25%.

A negative – at least technically – is that the S&P index moved above is all-time high closing level both yesterday and today, only to close below that level on each of the days. The high closing level is at 4796.57. The high price today reads 4802.40.. The high price yesterday reached 4798.50.

The earning season got underway with JPMorgan, Citi, Wells Fargo announcing.

Next week, other financial institutions are scheduled to release including

• Tuesday: Morgan Stanley, PNC, Goldman Sachs
• Wednesday Citizens Financial Group, U.S. Bancorp, Discover
• Thursday: Key Bank, M&T Bank, Truist, Northern Trust
• Friday: State Street, Comerica, Ally

Thinking about other earnings releases going forward? Below is a summary of the earnings calendar for some of the major companies:

• January 23: Netflix, 3M, Intuitive Surgical, Verizon, Johnson & Johnson, P&G
• January 24: Tesla, IBM, servicenow
• January 25: Intel, Southwest Airlines, Northrop Grumman
• January 26, Caterpillar, American Express
• January 30: AMD, Pfizer, GM, UPS, Stryker
• January 31: Microsoft, MasterCard, Boeing, Phillips 66, Boston Scientific
• February 1: Apple, Meta, Alphabet, Merck, Honeywell, Amazon
• February 2: Chevron, Exxon
• February 5: McDonald’s
• February 6: Ford, Chipotle
• February 7: Walt Disney, PayPal, McKesson
• February 8: ConocoPhillips
• February 9 PepsiCo

Thank you for your support. Wishing all a happy and healthy weekend.

This article was written by Greg Michalowski at www.forexlive.com.

The AUDUSD technicals are closing what has been an up-and-down trading week with a bias to the downside. That is a result, of the price action that has taken the price back below the 200 and 100-hour MAs at 0.6711 and 0.6700. Staying below those MAs tilts the bias more to the downside.

Although the bias is more to the downside, this week’s trading had several different shifts in that bias including the price action today.

• The price highs today moved up to test the low of what is a topside swing level between 0.6727 to 0.6738.
• On the downside today, the low of the day, bottomed near the low of a swing area that formed a floor for the early part of the week at 0.6676.

The price did move below that level on Thursday after the stronger-than-expected CPI, but the momentum could not be sustained and the price rebounded back higher setting up the ups and downs today.

The video above outlines the levels in play as the trading comes to an end, and traders look to the new week.

This article was written by Greg Michalowski at www.forexlive.com.

Retail spending from Canadian consumers at the country’s largest bank suggests a slight decrease in spending, with hardly any improvement year-over-year.

„Purchases of physical merchandise (excluding motor vehicles) ticked lower in December,“ RBC said in its month spending tracker, which is based on its cardholder data.

Spending on gifts was up just over 4% this year in Nov/Dec in nominal terms, just ahead of the 3% y/y inflation rate. However for December alone, both discretionary goods and services spending ended on a softer note.

Canadians continue to feel the squeeze of higher interest rates, but softer broader economic growth data (per-person GDP is on track to decline for a 6th consecutive quarter in Q4 2023) is bringing the Bank of Canada closer to a potential pivot to interest rate cuts, likely in the middle of the year in our own forecast.

Read the full report

This article was written by Adam Button at www.forexlive.com.

US markets are closed on Monday so it will be a quiet one. However Asian, European and Canadian markets are open and the forex market never closes for holidays.

Globally, eyes on Monday will be on stock markets in Taiwan (and China) following Saturday’s election.

Data elsewhere includes German GDP and the Bank of Canada business outlook survey.

This article was written by Adam Button at www.forexlive.com.

A miss on both earnings and revenue isn’t a good sign (the same goes for BofA earnings as well today) and that is arguably what is weighing further on stocks right now. In any case, Jamie Dimon’s remark as per the headline above also serves as a warning and that is taking some of the enthusiasm out of markets after the reaction to the CPI data yesterday.

This article was written by Justin Low at www.forexlive.com.

US futures are now down near the lows for the day, with S&P 500 futures falling by 0.4% ahead of US trading. This comes as Treasury yields are keeping steadier, with 10-year yields up 1.7 bps to 3.989% on the day. The drop comes as the big banks are releasing earnings, adding to the post-CPI push and pull play out across markets.

All of this is keeping the dollar a touch firmer as well now with EUR/USD down 0.2% to 1.0948 and GBP/USD down 0.2% as well to 1.2730 on the day. USD/JPY did push lower to 144.90 earlier in the session but is now back to flat levels around 145.23 currently.

The dollar’s advance is not a uniform one though, as gold is up to session highs at around $2,045 – up 0.8% on the day – and looking to push past key near-term resistance as highlighted here. Meanwhile, tensions in the Middle East continue to fuel the rally in oil with WTI crude up over 4% to near $75 at the moment.

This article was written by Justin Low at www.forexlive.com.

This is yet again another heads up to the upcoming UK labour market report that will be released next week. This has been an ongoing thing since October already as seen here. As noted at the time, ONS says that the data will feature „a new series using additional data sources to produce adjusted levels and rates for employment, unemployment and inactivity“.

To add to the headline above, ONS says that a fuller release of the UK labour market statistics should come in February.

This article was written by Justin Low at www.forexlive.com.

USD

• The Fed left interest rates unchanged as
  expected at the last meeting with a shift in the statement that indicated the
  end of the tightening cycle.
• The Summary of Economic Projections showed a
  downward revision to Growth and Core PCE in 2024 while the Unemployment Rate
  was left unchanged. Moreover, the Dot Plot was revised to show three rate cuts
  in 2024 compared to just two in the last projection.
• Fed Chair Powell didn’t
  push back against the strong dovish pricing and even said that they are focused
  on not making the mistake of holding rates high for too long.
• The latest US CPI
  slightly beat expectations but analysts expect the Core PCE to print at 0.2%
  M/M again following the CPI data.
• The labour market continues to soften although Initial Claims keep on
  hovering around cycle lows while Continuing Claims got stuck at a higher level.
• The latest ISM Manufacturing
  PMI
  beat expectations, while the ISM Services PMI missed
  by a big margin.
• The hawkish Fed members have been leaning
  on a more neutral side lately.
• The market expects the Fed to start cutting rates
  in Q1 2024.

AUD

• The
  RBA left interest rates unchanged as expected at the last meeting with
  the central bank maintaining the usual data dependent language.
• The
  recent Monthly CPI report missed expectations across
  the board which is another welcome development for the RBA.
• The
  latest labour market report beat forecasts across the
  board although the unemployment rate rose more than expected.
• The
  wage price index surprised to the upside as wage
  growth in Australia remains strong.
• The
  Australian PMIs improved recently but remain in
  contraction.
• The
  market expects the RBA to start cutting rates in Q3 2024.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that AUDUSD continues
to consolidate at a key support zone
around the 0.6670 level where we can also find the 61.8% Fibonacci retracement level
for confluence. The
buyers are likely to keep piling in here with a defined risk below the support
to position for a rally into the 0.69 handle. The sellers, on the other hand,
will want to see the price breaking lower to increase the bearish bets into the
0.65 handle.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the recent
price action has been rangebound as the market remains uncertain where to go
next given the mixed economic data. If the price breaks above the minor trendline we can
expect the buyers to increase the bullish bets into the 0.69 handle while a
break below the support will likely trigger a selloff into the 0.65 level.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with no clear level where to lean onto except
the support zone and the minor trendline. The best strategy is generally to sit
out and wait for a breakout supported by a fundamental catalyst, although one
can also “play the range” by buying at support and selling at resistance.

Upcoming Events

Today the only notable event on the agenda is the US
PPI data.

This article was written by FL Contributors at www.forexlive.com.

This is related to the quarterly economic outlook report due this month, with the news yesterday here: BOJ reportedly considers lowering price outlook for fiscal year 2024 to middle 2% range

The sources cited in this report say that the BOJ is likely to cut its core inflation forecast for the fiscal year 2024 (currently 2.8%) amid the recent decline in oil prices. That fits with the linked story from above yesterday. However, policymakers are not likely to make any major changes to their „core core“ inflation forecast – expected to stick around 1.9% for both fiscal year 2024 and 2025.

One of the sources said that „the broad uptrend in inflation and wages remains intact“, with another stating that „consumption is holding up and there’s growing conviction that wage hikes will continue, and even broaden, this year“.

This article was written by Justin Low at www.forexlive.com.